The average public sector employee makes 18 to 37 per cent more than a comparable employee working in the private sector, according to a new report from the Canadian Federation of Independent Business.
The report, which compares employee compensation in the private and public sectors found that, when salaries, benefits and working hours are factored in, a private sector employee makes up to $8,150 less per year, and works up to six hours more each week, compared to someone doing the same job for the government.
If government workers were paid at the same rate as their private sector counterparts, Canadian taxpayers would save up to $20 billion a year, according to the report.
CFIB chief economist Ted Mallett said, while the numbers are startling, the organization has arrived at similar conclusions in previous reports on the subject.
"We've been finding this for decades," he told CTV's Canada AM on Monday. "The numbers don't really change a whole lot, so we're hoping we can start to get some traction to make the cost of our government a lot more affordable."
He added that the $20 billion figure is likely an underestimate, as the CFIB was not able to find good metrics to measure certain employee benefits.
The report, which relied on data from the 2011 National Household Survey, found that the compensation gap widens when employment benefits including working hours and pensions were taken into account. The findings are based on the average full-time employment earnings of more than 7.2 million Canadians.
Other highlights of the report include:
- The federal government had the largest compensation gap, with a salary premium of 13 per cent, growing to 33.2 per cent once benefits were accounted for;
- The salary premium for municipal employees was 8.9 per cent, growing to 22.3 per cent with benefits;
- The salary premium for provincial government employees was 5.5 per cent, growing to 21.2 per cent with benefits;
- Among the various public sectors, Canada Post employees had one of the biggest salary premiums of 16.6 per cent, growing to 36.9 per cent with benefits;
- For 2010, annual wages and salaries for the public sector ranged from $51,029 to $69,833, compared to $48,872 to $61,688 for private sector employees.
Mallett said that the gap between public sector and private sector compensation is likely due to the lack of a competitive marketplace for public services.
Unlike the private sector, where wages are often tied to the value of a particular product in the open market, there is no comparable way to determine wages in the public sector, he said, noting that public sector unions, particularly in strike situations, also play a role in driving the wage gap.
"The point is, they'd like to run government efficiently, but they want to get people back to work first, and they'll figure out how to pay for it later," Mallet said.
He added in a statement: "Public sector earnings have been allowed to drift well above market-tested norms, and cash-strapped governments are looking for ways to invest in infrastructure and other priorities. Closing the gap is not just what's fair, it's what is needed."